from the don't-underestimate-the-importance dept

Next month, I have a law review article coming out, specifically focused on how much innovation is held back and hindered when courts rule against new and innovative technologies based on the claim that they are infringing copyrights. This goes well beyond just the technology on trial itself, but many follow-on innovators who are held back or hindered in either designing their innovations or receiving investments for those same innovations. Markham Erickson, a telecom and internet lawyer, has written up a blog post that highlights this same point in looking at the recent ruling in the Aereo caes and how important the Cablevision case was in driving the innovation that led to Aereo, and to a variety of other investments in online services, and cloud computing in particular. First, Erickson notes that both the Cablevision and Aereo rulings helped create legal symmetry such that the length of a cable should not impact whether a technology is legal or not (i.e., a remote device is treated the same as a device in or on your home), and then he talks about the wider impact of that clarity:

In reaching this conclusion, the court placed utmost importance on certain technological designs such as the use of an individual antennae and copies unique to the individual. The court also made clear that Cablevision’s holding was not confined to particular, pre-approved technologies: “[W]e see no support in Cablevision or in this court’s subsequent decisions for the Plaintiff’s argument that Cablevision’s interpretation of the Transmit clause is confined to technologies similar to the VCR.” Aereo, 2013 WL at *11.

This rejection of a technology-specific reading of Cablevision should be heartening to cloud service providers. The reliance of cloud service providers on Cablevision is hard to overstate. After the Cablevision decision, the average quarterly investment in cloud computing in the United States increased by 41 percent. By one estimate, the certainty provided by Cablevision led to an additional incremental investment in US cloud computing firms of anywhere between $728 million and $1.3 billion in the 2 and 1/2 years following the decision. As the Second Circuit observed in Aereo, “many media and technology companies have relied onCablevision as an authoritative interpretation of the Transmit Clause. One example is cloud media services, which have proliferated in recent years.”

And yet, he notes, this clarity and ability to invest and to innovate may be at risk. As we noted at the time, the stunning dissent in the Aereo case actually indicated that designing a system to be within the clear boundaries of the law as explained in the earlier case should be seen as intent to infringe. That's a rather incredible interpretation when you think about it. Following the explicit nature of the law should be seen as trying to subvert it? Talk about a way to chill innovation. If that became the law, the chilling effects on innovation would be tremendous. Not only would innovators be fearful of creating new services that might be sued for infringement, they wouldn't even know how to make sure their technologies were considered legal, due to a court system that explicitly argued that any attempt to obey the law may be seen as an attempt to subvert it!

Meanwhile, other courts seem to be attacking these basic principles, which may result in more stifling of significant innovation and investment. We've avoided covering what's now called either the "AereoKiller" or "BarryDriller" cases, because the service, which used to be known as FilmOn, seems much more focused on doing stupid promotional stunts, rather than something serious. His lawsuit against CBS, as well as changing the name of FilmOn to AereoKiller/BarryDriller, highlights the sort of focus that David seems to have. And, unfortunately, when you have someone more focused on publicity stunts and acting like a clown, rather than mounting a serious legal defense, you get bad rulings. AereoKiller is a somewhat similar service to Aereo, but may actually end up killing Aereo and a ton of other important innovations, not because it's better/more innovative, but because it's mounting a horrible defense on a similar issue, and has already lost at the district court. The impact on innovation could be huge. With a split decision and concerns about Aereo's future success, investment in key innovations, including various cloud services, may be held back, while other countries continue to invest in such companies.

It's incredible that we have a legal process, and a tool in today's copyright law, that is being actively used to scare off key investment in new innovations at a time that we should be much more focused on innovation.

from the a-step-forward dept

Back during the fight for the America Invents Act -- the big patent reform effort from a couple years ago -- Senator Chuck Schumer was able to add in an amendment that made it easier to get the USPTO to review business method patents. As we noted at the time, this amendment also effectively killed off some specific financial patents. This was a good step, though we wondered why it was limited just to business method patents. The general answer that we got back from those involved in the process was that this would be a "test bed." That test bed is now known as Section 18 of the America Invents Act, which makes it easier for those sued to get the patent reviewed by the USPTO, and also makes it more likely that a court will put a lawsuit on hold while the USPTO reviews the patent. Given how often re-exams by the USPTO lead to claims being rejected, this process can certainly help dump some really bad patents before a defendant has to go through an incredibly pricey court case (and appeals and such).

It's now being reported that Schumer is set to introduce a new bill that will expand Section 18 to cover technology patents, rather than just limiting it to business method patents (the more cynical among you will note the rapid growth of New York's tech sector as a reason for this expansion). This is definitely a big step in the right direction. If something like this was also combined with the SHIELD Act, which shifts fees to the trolls for bogus patent lawsuits, it would really help limit some of the most egregious activities of trolls.

That said, this is only one step. There are some limitations and oddities within Section 18 which may have been necessary to get it into law, but which also limit the overall effectiveness of the bill against trolls. While we're extremely encouraged that Congress and other parts of the federal government appear to finally be taking the issue of patent trolling seriously, there is still much more to be done. Thankfully, there are indications from a bunch of Senators and Representatives that they know this is a problem and they intend to do something to fix it. Kudos to Senator Schumer for jumping in with this fix, and we look forward to more efforts to fix our broken patent system and to limit innovation-hindering patent trolling.